Franklin County heading for financial squeeze, experts say

Josh Jarman, The Columbus Dispatch

Monday

Jul 29, 2013 at 12:01 AMJul 29, 2013 at 11:25 AM

Though it says Franklin County will need to eat into its cash reserve over the next three years, a group of financial experts stopped short of recommending that commissioners raise the sales tax. After months of poring over county finances and getting a crash course in how county budgets work, the group concluded in its final report on Friday that the county is headed for financial trouble. It's projected to draw about $31 million out of its cash reserve to make ends meet over the next three years.

Though it says Franklin County will need to eat into its cash reserve over the next three years, a group of financial experts stopped short of recommending that commissioners raise the sales tax.

Commissioners formed the panel of private, corporate, higher-education and governmental finance experts in February to judge whether the county was spending more than it was making. If so, the group was asked to recommend “out-of-the-box” solutions.

After months of poring over county finances and getting a crash course in how county budgets work, the group concluded in its final report on Friday that the county is headed for financial trouble. It’s projected to draw about $31 million out of its cash reserve to make ends meet over the next three years.

The group said the imbalance largely is because of cuts in state and federal funding that have not been offset by lower costs to provide services required by state and federal law.

If nothing is done, they said, the county will continue to hemorrhage money. It runs the risk of losing its AAA bond ratings, which allow the county to borrow money at the lowest-possible interest rates, saving millions of dollars a year on debt payments.

For now, the panel said, the county should look for more ways to save money and double the $2 conveyance fee levied per $1,000 of value on home purchases. That would bring in about $7 million more each year and help close the gap the panel has identified.

But panel members acknowledged that such measures would not cover future growth in the county budget.

Ty Marsh, a consultant and former president of the Columbus Chamber, served as the panel’s chairman.

“Our challenge has been, in terms of the numbers, is it doesn’t tell the whole story,” he said. “ There are clearly needs in this community that are not being met, because of cutbacks.”

Restoring cut services, planning for future growth and cooperating with private businesses for economic development are important county activities that the panel simply didn’t have the time to address, Marsh said.

It will be up to the commissioners to tackle those questions and, when they do, the panel has made it clear that they should look at all their options — including raising the county’s sales tax by a quarter of a percentage point to 1 percent.

Doing so would raise about $49 million a year at current collection rates. The commissioners would have to approve the increase by the end of September for it to take effect next year.

Several planned projects could increase the budget: On Thursday, the commissioners approved a five-year construction plan that calls for building a $150 million jail complex and a $50 million morgue.

Both are necessities, county Administrator Don Brown said, and both will require the county to come up with a large amount of cash or to take on new debt.

He said the county has outgrown its current morgue on King Avenue in Columbus. Even if it hadn’t , the facility is on the medical campus of Ohio State University, which has told the county it needs the land back in 2018.

“We have to move at warp speed” to find a location for a new morgue, design it and have it built in five years, Brown said.

The county’s two jails are rapidly deteriorating, he said. They also were built before modern corrections philosophies were developed and cost the county significantly more to staff with deputies than a new one would.

If the county had the money, its smartest move would be to build both facilities using new, low-interest bonds, while using an influx of cash to pay off older, higher-interest debt, Brown said.

Like her two colleagues, Commissioner Paula Brooks didn’t want to comment on the panel’s report until she had more time to read it and ask questions. She did say that the commissioners have some hard decisions to make, and soon.

When asked whether she thought the county staff was likely to recommend that the commissioners increase the sales tax, she said that all options have to be on the table.

“We will have to match our need to the revenue that is available, and that’s a heavy burden,” Brooks said.

jjarman@dispatch.com

@Josh_Jarman

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